Monday November 19, 2018

Finances

Walgreens' Stock Sinks Despite Beating Earnings Estimates

Walgreens Boots Alliance, Inc. (WBA) reported quarterly earnings on Thursday, June 28. Despite beating earnings and revenue estimates, the company's shares
fell more than 10% following the earnings' release due to disappointing same-store sales and Amazon's announcement of a new pharmacy deal that could
potentially cut into Walgreen's profits.

Walgreens announced revenue of $34.33 billion for the third quarter. This is up 14% from revenue of $30.12 billion reported in the same quarter last year
and above the $34.05 billion in revenue that Wall Street expected.

"I am pleased that, in what has been a challenging environment, we have again delivered solid earnings per share growth combined with healthy cash flow,"
said Walgreens CEO Stefano Pessina. "We expect to continue to drive growth, bringing more patients to our U.S. pharmacies through the recent acquisition of
Rite Aid stores and through strategic partnerships."

Walgreens reported net earnings of $1.35 billion, up from $1.17 billion reported one year ago. On an adjusted earnings per share basis, the company reported
profit of $1.53 per share, surpassing the $1.48 per share that analysts predicted.

The company's shares fell to a 52-week low following the report's release, despite surpassing analysts' earnings and revenue predictions. Investors were
discouraged by the 4% drop in Walgreens' comparable retail sales in the U.S. and its flat same-store pharmacy revenue. The stock took a deeper dive
following Amazon's announcement that it plans to acquire PillPack, an online pharmacy company that packages, organizes and delivers prescriptions. Amazon's
acquisition could come at a cost to Walgreens' prescription business, which is its largest revenue source. Walgreens' shares were down more than 10% by
mid-day trading on Thursday.

Walgreens Boots Alliance, Inc. (WBA) shares ended the week at $60.01, down 10.9% for the week.

Nike's Earnings Jump as U.S. Sales Rebound

NIKE, Inc. (NKE) released its full-year and fourth-quarter earnings report on Thursday, June 28. The company surpassed Wall Street's earnings and revenue
predictions, causing shares to jump 9% during after-hours trading following the earnings' release.

Nike reported quarterly revenue of $9.79 billion. This is up 13% from last year's fourth quarter revenue of $8.68 billion and is above the $9.41 billion
Wall Street expected. For the full year, the company brought in $36.40 billion in revenue, up 6% from the prior year's revenue of $34.35 billion.

"Our new innovation is winning with consumers, driving significant momentum in our international geographies and a return to growth in North America," said
Nike President and CEO Mark Parker. "Fueled by a complete digital transformation of our company end-to-end, this year set the foundation for Nike's next
wave of long-term, sustainable growth and profitability."

The company announced quarterly profits of $1.34 billion, up 13% from earnings of $1.01 billion one year ago. Nike reported adjusted quarterly earnings of
$0.69 per share, topping the $0.64 per share that analysts predicted.

Nike's latest footwear launches, including Air VaporMax Flyknit and Air Max 270, proved profitable in the fourth quarter. The company's North America sales,
which have been sluggish in past quarters, picked up speed and rose for the first time in four quarters. Outside North America, Nike saw revenue jump,
particularly in China where quarterly sales were up 35% year-over-year.

NIKE, Inc. (NKE) shares ended the week at $79.70, up 8.7% for the week.

General Mills Beats Earnings Expectations

General Mills (GIS) announced quarterly earnings on Wednesday, June 27. The company reported better-than-expected earnings and announced plans to cut more
than 600 jobs by next spring.

Revenue for the fourth quarter reached $3.89 billion, up 2% from the $3.81 billion reported during the same quarter last year. For the full year, the
company reported revenue of $15.74 billion, compared to revenue of $15.62 billion one year ago.

"Fiscal 2018 represented an important first step in returning our business to sustainable topline growth," said General Mills CEO Jeff Harmening. "We made
significant progress toward competing more effectively this year, with strong innovation, marketing, and in-store execution driving positive organic sales
growth in each of our last three quarters."

General Mills reported net earnings of $354.4 million, down 13% from last year's fourth quarter earnings of $408.9 million. On an adjusted earnings per
share basis, the company posted profit of $0.79 per share, surpassing the $0.72 per share Wall Street expected.

On Wednesday, the maker of Cheerios, Yoplait, Haagen-Dazs and Progresso soup announced that it will be cutting 625 jobs by spring of next year in order to
reduce costs, as fluctuating consumer preferences continue to take a toll on the company's profits. General Mills experienced a 5% drop in its U.S. yogurt
sales and a 2% decline in U.S. meals and baking products revenue in the fourth quarter. The company is hopeful that its launch of "YQ by Yoplait," a low
sugar, all-natural yogurt, will help turn its yogurt segment around and generate positive revenue. The 99% lactose-free yogurt hit the shelves last week and
is marketed as a "smarter, not sweeter" version of other yogurts on the grocery shelf.

General Mills (GIS) shares ended the week at $44.26, down 6.8% for the week.

The Dow started the week of 6/25 at 24,464 and closed at 24,273 on 6/29. The S&P 500 started the week at 2,743 and closed at 2,718. The NASDAQ started
the week at 7,631 and closed at 7,510.

Treasury Yields React to Continued Trade Tensions

U.S. Treasury bonds prices edged lower and yields inched higher as stocks rose in response to a slight increase in investors' risk appetites. Earlier in the
week, concerns surrounding global trade tensions caused yields drop to their lowest level since May 31.

This week, the markets reacted to mixed messages concerning a potential trade war between the U.S. and China. On Wednesday, trade war fears heightened
investor demand for safe-haven bonds, causing the yield on the 10-year Treasury note to dip to a one-month low of 2.822%.

By Thursday, concerns had eased slightly, causing major U.S. stock indexes to pick up speed. The S&P 500 climbed 0.6%, while the Dow Jones Industrial
Average gained 0.4%. Yields on U.S. Treasury bonds increased in response, with the 10-year note adding 2.2 basis points to 2.849% and the 30-year bond
picking up 0.9 basis points to 2.980%. Bond yields move inversely to prices.

"The move is consistent with the idea that things might take a turn for the better on the trade front," said Ian Lyngen, head of U.S. government bond
strategy at BMO Capital Markets. "But volumes are relatively low, so there's a limited amount of conviction behind the move."

Despite the slight retreat from midweek lows, the yield curve between the two-year and 10-year Treasury note continues to hover around decade lows. By
Friday, the gap between the two-year and 10-year Treasury note reached 31 basis points, its flattest level since August 2007.

On Thursday, James Bullard, President of the Federal Reserve Bank of St. Louis, expressed concern over the flattening yield curve and said that the Federal
Reserve should consider slowing down its interest rate increases in order to prevent the curve from inverting. He noted that an inverted yield curve has
signaled a recession in the past and that a yield curve inversion would be "a key near-term risk for the Fed."

The 10-year Treasury note yield closed at 2.85% on 6/29 while the 30-year Treasury bond yield was 2.98%.

INTEREST RATES

Mortgage Rates Continue to Fall

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, June 28. The report revealed that mortgage rates fell for the second
consecutive week.

The 30-year fixed rate mortgage averaged 4.55% this week, down from 4.57% last week. During this time last year, the 30-year fixed rate mortgage averaged
3.88%.

This week, the 15-year fixed rate mortgage averaged 4.04%, relatively unchanged from last week. Last year at this time, the 15-year fixed rate mortgage
averaged 3.17%.

"The decrease in borrowing costs are a nice slice of relief for prospective buyers looking to get into the market this summer," said Sam Khater, Chief
Economist at Freddie Mac. "Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis
points higher than this week a year ago."

Based on published national averages, the money market account closed at 1.29% on 6/29. The 1-year CD finished at 2.34%.

Mortgage Rates Continue to Fall

Freddie Mac released its latest Primary Mortgage Market Survey (PMMS) on Thursday, June 28. The report revealed that mortgage rates fell for the second consecutive week.

The 30-year fixed rate mortgage averaged 4.55% this week, down from 4.57% last week. During this time last year, the 30-year fixed rate mortgage averaged
3.88%.

This week, the 15-year fixed rate mortgage averaged 4.04%, relatively unchanged from last week. Last year at this time, the 15-year fixed rate mortgage
averaged 3.17%.

"The decrease in borrowing costs are a nice slice of relief for prospective buyers looking to get into the market this summer," said Sam Khater, Chief
Economist at Freddie Mac. "Some are undoubtedly feeling the affordability hit from swift price appreciation and mortgage rates that are still 67 basis
points higher than this week a year ago."

Based on published national averages, the money market account closed at 1.29% on 6/29. The 1-year CD finished at 2.34%.

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